Surfactant Protein B (SP-B) plays a central role in alveolar type II cell physiology. As a component of pulmonary surfactant, it facilitates transfer of phospholipids to the air-liquid interface, lowering of monolayer surface tension, and altering of monolayer composition. SP-B is critical to the differentiation of type II cells, specifically lamellar body genesis. We have been exploring the post-translational regulation of SP-B production. This stems from observations that despite increasing SP-B RNA, mature SP-B protein does not accumulate in the fetal lung until late in gestation, thereby allowing for a burst of SP-B production that facilitates LB genesis and surfactant secretion into fetal lung fluid. We have shown that post-translational events in SP-B biogenesis are important in regulating the production and transit of SP-B in the alveolar type II cell. These events are especially critical when de novo synthesis of surfactant is essential, as in the final phase of lung maturation for the transition to air breathing (as in RDS), and when extracellular and/or intracellular surfactant stores are depleted (as in ARDS). Work from the previous funding period demonstrated that enzymes involved in proSP-B post-translational processing are important to type II cell physiology. Based on new preliminary data, we hypothesize now that post-translational events involving the protease Pepsinogen C (PGC) and ER chaperones such as ERp29 are critical for regulating SP-B production, and consequently lamellar body genesis and type II cell physiology. We will test this hypothesis in 3 specific aims: 1) Characterize the role of PGC in SP-B proteolytic processing, 2) Establish key transcriptional elements directing the developmental and cell-type specificity of PGC expression, and 3) Demonstrate that chaperone interactions, specifically ERp29:proSP-B interactions, facilitate export of proSP-B from the ER. We will use an in vitro system of human type II cell differentiation to examine the process of lamellar body genesis as a result of disrupted SP-B processing/trafficking. Project Narrative: Surfactant therapy has been a success for premature infants with respiratory distress, but has not been as successful in adults. Adult respiratory distress syndrome is associated with dysfunction or decreased Surfactant Protein B (SP-B). These studies will improve our understanding of factors that control SP-B production and will provide a foundation for novel therapeutic strategies to enhance SP-B production and surfactant function.